Valeant shifts its strategy in a big way to respond to its PR crisis

J. Michael Pearson, Chairman of the board and Chief Executive Officer of Valeant Pharmaceuticals International Inc., speaks during their annual general meeting in Laval, Quebec May 20, 2014. REUTERS/Christinne Muschi WASHINGTON/NEW YORK (Reuters) - U.S. pharmaceuticals firm Valeant, under mounting pressure from Congress and prosecutors over its drug pricing, has hired an attorney in Washington, DC and crisis public relations experts with political connections, according to sources familiar with the matter.

The move, confirmed by sources and through documents viewed by Reuters, signals a shift for Valeant Pharmaceuticals, which does not maintain a large presence on Capitol Hill.

In recent months the company has attracted scrutiny over steep price hikes on some of its drugs, potentially anti-competitive behavior in its contact lens business and close ties to a specialty pharmacy with aggressive billing practices.

Valeant shares have lost nearly 75 percent of their value following the disclosures. Billionaire Bill Ackman, one of Valeant's largest shareholders, has said the company made a "meaningful mistake" of underinvesting in public relations as it dealt with questions about its business practices.

Activist investor Bill Ackman, chief executive of Pershing Square Capital, speaks with a specialist trader on the floor of the New York Stock Exchange Thomson Reuters Valeant recently retained attorney Robert Kelner, a partner at the law firm Covington & Burling, to help respond to congressional inquiries, including an investigation led by an oversight committee in the U.S. House of Representatives, according to a November 20 letter seen by Reuters that was sent to Democratic Congressman Elijah Cummings of Maryland. Covington's attorney roster includes former Attorney General Eric Holder, and it has represented major drugmakers such as Johnson & Johnson and Pfizer.

Valeant has separately tapped Vianovo, a boutique crisis public affairs firm run by former political campaign and government aides that specializes in "high-stakes brand, policy and crisis issues" and counts Wal-Mart and IBM among its clientele, according to a person familiar with the matter.

Vianovo has also lobbied on behalf of companies including Apache Corp, as well as health care networks such as Adventist Healthcare, according to government records.

Valeant's lobbying efforts are far more modest than that of industry peers, and the company has spent less than $250,000 for the first half of 2015, according to reports filed by its lobbyists.

Pharmaceutical giant Pfizer, by contrast, spent $4.9 million during the first half of 2015.

The Senate Special Committee on Aging last week kicked off the first of a series of hearings to investigate rising costs in off-patent drugs, with a focus on two heart drugs manufactured by Valeant.

Valeant was asked to provide documentation to the panel by December 2.

The panel's Republican Chairwoman, Susan Collins of Maine, told reporters on Wednesday she plans to ask Valeant Chief Executive Michael Pearson to testify at a future hearing. The House Oversight Committee is also investigating drug pricing and plans to hold a hearing sometime in the new year.

"Valeant uses a variety of firms for legal and public relations work. Covington recently was retained to assist the company in responding to congressional inquiries," Laurie Little, the senior vice president of investor relations, said in a statement.

According to a July 2015 survey sponsored by the Public Affairs Council, 64 percent of Americans say a company's honesty and responsiveness in dealing with a crisis is the most important factor when deciding whether to buy from that company in the future.

The survey also found that the pharmaceutical industry was deemed the least trustworthy sector.

(Reporting by Sarah N. Lynch in Washington and David Ingram in New York; additional reporting by Greg Roumeliotis; editing by Clelia Oziel)